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BACKGROUND
In October 2025, Emirates National Bank of Dubai P.J.S.C ("Emirates NBD") announced the acquisition of a controlling stake with board control in Ratnakar Bank Limited ("RBL") through a primary capital infusion up to approximately USD 3 billion for subscribing up to 60% of the total paid-up share capital of RBL, marking the largest FDI in India's financial services sector.1 Emirates NBD will become a 'promoter' of RBL post consummation of the transaction.2 This transaction is highly significant as it represents the first instance when a foreign bank will be acquiring a majority stake and board control in a profitable Indian bank. Although the transaction is approved by the Competition Commission of India3 without requiring any modifications, it is still subject to several regulatory approvals. The effective completion of the transaction is targeted for April 2026.4
TRANSACTION STRUCTURE: THREE-LEGGED APPROACH
Under the Investment Agreement dated 18 October 2025 ("Investment Agreement"), Emirates NBD has agreed to acquire stake in RBL through a three-legged mechanism consisting of the following:
Phase 1: Investment Agreement and Preferential Issue
Under the Investment Agreement, Emirates NBD will subscribe to up to 959,045,636 fully paid equity shares at ₹280 per share through a preferential issue, representing approximately 60% of RBL's paid-up share capital for a subscription amount~ USD 3 billion.5
Phase 2: Mandatory Open Offer to Public Shareholders
Following execution of the Investment Agreement, Emirates NBD made a mandatory open offer to public shareholders under the SEBI Substantial Acquisition of Shares and Takeovers Regulations ('SAST Regulations') upon acquiring more than 25% voting rights of RBL. The open offer concluded on 26 December 2025, with post-offer disclosures awaited.6
Phase 3: Proposed Amalgamation of Emirates NBD Branch Operations
Following completion of Phase 1 and Phase 2, and subject to receipt of regulatory approvals, Emirates NBD proposes to amalgamate its India branches (Mumbai, Chennai, and Gurugram) into RBL.7
Under the FEMA Non-Debt Instruments Rules ('NDI Rules'), foreign banks may operate in India only through one of the following three channels: (a) branches; (b) a wholly owned subsidiary; or (c) a subsidiary with aggregate foreign investment of up to 74% in a private bank ("Subsidiary Mode of Presence"). Since RBL is a listed Banking Company, the only route available for the Emirates NBD for continuing its operations in India is through the Subsidiary Mode of Presence, replacing its current branch model.8
Gating Mechanism
Stage 1: The MPS Cap Ceiling (Maximum Permissible Shareholding)
Regulation 38 of SEBI Listing Obligations and Disclosure Requirements ('LODR') and the Rule 19A of the Securities Contracts Regulation Rules ("SCRR") provide that a listed company shall have a minimum public shareholding ("MPS") of 25% ("MPS Cap") to remain listed. Accordingly, the acquirer's final ownership cannot exceed 75% of the listed company.9
As a result, if the subscription shares under preferential allotment and tendered shares under the open offer are more than 75% threshold, then:
- Emirates NBD must proportionately reduce both acquisition of the tendered shares and subscription of subscription shares to bring the total shareholding back to 75%.
- This reduction is under SEBI Regulation 7(4) of SAST Regulations.
- It's called the "MPS Proportionate Reduction"
Stage 2: Foreign Shareholding Threshold Ceiling
NDI Rules and Consolidated FDI Policy restricts the total foreign ownership in a private bank to 74% of its issued and outstanding equity share capital ("FDI Threshold"). In case of RBL this would include:
- Final shares acquired by Emirates NDB (after any MPS Proportionate Reduction); and
- All other foreign investors' existing shares.
As a result, if Emirates NBD's final shareholding along with other foreign investors' shareholding is more than the FDI Threshold, then:
- Emirates NBD will be able to acquire fewer subscription shares than originally planned under the preferential offer.
- The tendered shares under open offer shall remain as is.
- This ensures total foreign ownership stays less than or equal to 74%.
Given the complexity of this transaction and the interplay of multiple statutory provisions and compliance requirements, the broad legal framework and approvals required thereunder are provided in Annexure 1 and Annexure 2 respectively.
OUR THOUGHTS
Foreign investor interest in Indian private banks is surging, with over USD 15 billion in deals completed in 2025. Notable examples include SMBC's 24% stake in Yes Bank and Abu Dhabi's IHC acquiring 42% of Sammaan Capital Limited for nearly USD 1 billion.
Yet, investors must weigh the legal asymmetry between ownership and control under India's banking laws. Foreign investors may hold up to 74% economic ownership, but voting rights are capped at 26%, shifting effective control to board governance and RBI oversight. This framework has three key implications:
- Regulatory-led control – board appointments, quorum rules, and RBI approvals drive de facto authority.
- Voting ceiling safeguard – the 26% cap prevents unilateral dominance, protecting minority shareholders and ensuring stability.
- Regulatory discretion – RBI approvals and exemptions (including promoter shareholding limits) are critical valuation factors.
Against this backdrop, Emirates NBD's multi‑billion dollar investment in RBL secures majority economic ownership and a strong foothold in India's fast‑growing private banking sector. The deal underscores confidence in India's macro fundamentals, offers investors exposure to a high‑growth market, and sets a precedent for deploying foreign capital within regulatory limits, making it a landmark transaction and potential blueprint for future cross‑border banking deals.
Annexure 1 Legal Framework
| S. No. | Provision | Details |
| 1. | Sections 12(2) of the Banking Regulation Act read with RBI Gazette Notification DBR.PSBD.No.1084/16.13.100/2016-17 dated 21 July 2016 ("RBI Notification") | Caps the exercise of voting rights by any shareholder, including promoters, at 26% of total voting rights |
| 2. | Section 12B of the Act and Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025 ("2025 Banking Companies Directions") | As per Paragraph 7, any acquisition exceeding 5% of a bank's share capital or voting rights requires prior RBI approval and adherence of the Acquirer to the 'Fit and Proper Criteria' as per Paragraph 6 of the 2025 Banking Companies Directions. |
| 3. | Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies ("Guidelines") | Paragraph 10 of the Guidelines limits promoter shareholding in a private bank up to 26%. However, this limit, upon RBI's discretion can be relaxed as per Paragraph 12 in cases of restructuring or change in control. |
| 4. | Regulations 3(1), 4 and 7 of the SAST Regulations | Mandatory open offer to public shareholders |
| 5. | FEMA NDI Rules and Consolidated FDI Policy 2020 | Schedule 1, Table (F.2.1) permits foreign shareholding in Indian banks up to 74% for the private banking sector. Accordingly, up to 49% of FDI can be made through the automatic route and any investment above 49% till 74% shall be made after seeking approval from Department for Promotion of Industry and Internal Trade. |
| 6. | Section 44-A of the Banking Regulation Act, and the RBI Master Direction – Amalgamation of Private Sector Banks Directions, 2016 | Amalgamation of Emirates NBD's Indian branches into and with RBL would require board approval from both the entities as well as strict adherence to RBI Master Direction – Amalgamation of Private Sector Banks, 2016 Chapter III B (Entitlement of Dissenting Shareholders) |
Annexure 2 List of Approvals
| Regulatory Body | Approvals to be obtained |
| Reserve Bank of India | Prior written approval of the RBI approving the amendment to its articles of association and memorandum of association; and |
| Prior approval of the RBI for the appointment of Emirates NBD' nominee director(s) on RBL's board. | |
| Prior written consent of the RBI for acquiring up to 74.00% (seventy-four per cent.) and not below 51.00% (fifty-one per cent.) of the total paid-up share capital of RBL, on such agreed terms | |
| Dispensation from the RBI with respect to dilution and glide-path requirements hence permitting Emirates NBD to maintain 51-74% shareholding in RBL indefinitely without mandatory phased shareholding reductions and compulsory equity dilution to public shareholders | |
| Approval of the RBI under the 'Scheme for setting up of wholly owned subsidiaries by foreign banks in India, 2013' issued by the RBI read with Paragraph F2.1.(g)(i) of the table in Schedule I of the NDI Rules, to hold shares of the Target Company, and concurrently for a temporary period, to operate in India as a branch of a foreign bank. | |
| CCI Approval | Under the Competition Act and Competition Combinations Regulations, Emirates NBD has obtain CCI's approval for the acquisition, which combines preferential issue and open offer. This approval assesses competitive implications of foreign banking entry through a listed private bank acquisition. |
| Central Bank of UAE (CBUAE) Approval | Emirates NBD requires home country regulatory clearance from CBUAE to consummate the transaction, reflecting the outbound investment nature of the acquisition. |
| Department for Promotion of Industry & Internal Trade (DPIIT) Approval | DPIIT must provide written approval for Emirates NBD to hold more than 49% and up to 74% of RBL Bank's paid-up share capital for foreign exchange purposes. |
Footnotes
1. Press release by Emirates National Bank of Dubai P.J.S.C dated 18 October 2025 (can be accessed at: https://www.emiratesnbd.com/en/media-center/emirates-nbd-to-acquire-majority-stake-in-rbl-bank ) ↩︎
2. Draft Letter of Offer by RBL Bank Ltd under Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 2015, dated 4 November 2024 at page 18 (can be accessed at: https://www.sebi.gov.in/sebi_data/commondocs/nov-2025/RBL%20Bank%20Limited%20-%20DLO_p.pdf ) ↩︎
3. Summary Order by the Competition Commission of India under Section 31 of Competition Act 2002, dated 20 January 2026 (can be accessed at: https://www.cci.gov.in/combination/orders-section31 ) ↩︎
4. Website Article by Angel One Broking dated 20 October 2025 (can be accessed at:https://www.angelone.in/news/market-updates/rbl-bank-ceo-breaks-down-emirates-nbd-deal-and-outlines-expansion-plans ) ↩︎
5. Draft Letter of Offer by RBL Bank Ltd under Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 2015, dated 4 November 2024 at page 22 (can be accessed at: https://www.sebi.gov.in/sebi_data/commondocs/nov-2025/RBL%20Bank%20Limited%20-%20DLO_p.pdf ) ↩︎
6. Disclosure by RBL Bank under Regulation 30 of Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulations, 2015 dated 28 October 2025 (can be accessed at: https://nsearchives.nseindia.com/corporate/RBLBANK_28102025185652_AdvertisementIntimation28102025Signed.pdf ) ↩︎
7. Draft Letter of Offer by RBL Bank Ltd under Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 2015, dated 4 November 2024 at page 8 (can be accessed at: https://www.sebi.gov.in/sebi_data/commondocs/nov-2025/RBL%20Bank%20Limited%20-%20DLO_p.pdf ) ↩︎
8. Schedule 1, Table F.2.1(g) of Foreign Exchange Management (Non-debt Instrument) Rules, 2019 ↩︎
9. Draft Letter of Offer by RBL Bank Ltd under Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 2015, dated 4 November 2024 at page 18 para 5 (can be accessed at: https://www.sebi.gov.in/sebi_data/commondocs/nov-2025/RBL%20Bank%20Limited%20-%20DLO_p.pdf ) ↩︎
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